MUNICIPAL HEALTH FACILITIES CORPORATIONS ACTS(ca4vpq55d31ucxr4acrx2h45...facilities corporations and...

MUNICIPAL HEALTH FACILITIES CORPORATIONS ACTAct 230 of 1987

AN ACT to authorize certain local governmental units to incorporate municipal health facilitiescorporations and subsidiary municipal health facilities corporations for establishing, modifying, operating,and managing health services and acquiring, constructing, adding to, repairing, remodeling, renovating,equipping, and re-equipping hospitals and other health care facilities and related purposes; to provide for theapplication of this act to existing municipal hospitals and for the transfer of ownership of hospital funds andpersonal property; to validate and ratify the existence, organization, actions, proceedings, and boardmembership of existing organizations acting as county public hospitals; to provide for the appointment oftrustees; to grant certain powers of a public body corporate to health facilities corporations and subsidiaryhealth facilities corporations; to empower certain local governmental units to encumber property for thebenefit of, transfer or make property available to, issue bonds to construct facilities to be used by, appropriatefunds for, and levy a tax for, municipal health facilities corporations and subsidiary municipal health facilitiescorporations; to empower certain local governmental units to guarantee obligations of municipal healthfacilities corporations and subsidiary municipal health facilities corporations and to permit certain localgovernmental units to pledge their full faith and credit to pay such guaranties; to provide for transfer ofownership or operation of health care facilities and health services to nonprofit health care organizations; toauthorize municipal health facilities corporations and subsidiary municipal health facilities corporations toborrow money and issue notes for the purposes of meeting expenses of operation and to issue corporationobligations for the purpose of acquisition, construction, repair, remodeling, equipping or re-equipping ofhealth care facilities and for the refinancing, refunding, or refunding in advance of indebtedness of themunicipal health facilities corporations or the subsidiary municipal health facilities corporations or ofindebtedness of certain local governmental units undertaken on their behalf; to authorize municipal healthfacilities corporations and subsidiary municipal health facilities corporations to enter into mortgages, deeds oftrust, and other agreements for security which may include provisions for the appointment of receivers; toexempt obligations and property of municipal health facilities corporations and subsidiary municipal healthfacilities corporations from taxation; and to provide other rights, powers, and duties of municipal healthfacilities corporations and subsidiary municipal health facilities corporations.

History: 1987, Act 230, Eff. Feb. 27, 1988;Am. 1988, Act 502, Eff. Jan. 1, 1989.

The People of the State of Michigan enact:

CHAPTER 1

331.1101 Short title.Sec. 101. This act shall be known and may be cited as the “municipal health facilities corporations act”.History: 1987, Act 230, Eff. Feb. 27, 1988;Am. 1988, Act 502, Eff. Jan. 1, 1989.

331.1102 Legislative finding.Sec. 102. The health and welfare of the people of this state being a matter of primary public concern, the

legislature finds that it is essential that local governmental units be provided with appropriate means andmethods for the effective and efficient administration of hospitals in order to foster financial viability of localgovernmental units and the effective and efficient provision of health services, and for the establishment,maintenance, acquisition, expansion, renovation, financing, and refinancing of public health care facilities atreasonable cost. Therefore, the powers granted in this act constitute the performance of essential publicpurposes and governmental functions of this state and its local governmental units.


331.1103 Definitions.Sec. 103. As used in this act:(a) "Board of trustees" means the board of trustees of a corporation created under or governed by this act.(b) "City" means a city establishing a corporation incorporated under, or governed by, this act.(c) "City public hospital" means a health care facility that is owned or operated by a city.(d) "Corporation" means a municipal health facilities corporation incorporated under this act or created

under 1913 PA 350, MCL 331.151 to 331.169, or under 1945 PA 109, MCL 331.201 to 331.213, andgoverned by this act. The term includes a restructured corporation.

(e) "Corporation obligation" means a bond, note, or any other legal instrument issued by a corporation or

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Courtesy of www.legislature.mi.gov

subsidiary corporation under chapter 4 that evidences indebtedness of a corporation or a subsidiarycorporation, including principal, interest, and premiums, if any, on that indebtedness. Notes issued undersection 401 are not considered corporation obligations.

(f) "County" means a county establishing a corporation incorporated under, or governed by, this act.(g) "County public hospital" means a public corporation organized and existing or purportedly organized

and existing under1913 PA 350, MCL 331.151 to 331.169, or under 1945 PA 109, MCL 331.201 to 331.213,on the effective date of this act.

(h) "Direct provider of health care" means a person or organization whose primary current activity isproviding health services to individuals. The term includes a person or organization licensed, certified, orregistered under article 6 or 15 of the public health code, 1978 PA 368, MCL 333.6101 to 333.6523 and333.16101 to 333.18838, or a professional corporation or other public or private organization composed of oremploying direct providers of health care.

(i) "Health care facilities" means buildings, structures, or equipment suitable and intended for, or incidentalor ancillary to, use in providing health services, including, but not limited to, hospitals; hospital long-termcare units; infirmaries; sanatoria; nursing homes; medical care facilities; outpatient clinics; ambulatory carefacilities; surgical and diagnostic facilities; hospices; clinical laboratories; shared service facilities; laundries;meeting rooms; classrooms and other educational facilities; students', nurses', interns', or physicians'residences; administration buildings; facilities for use as or by health maintenance organizations; facilities forambulance operations, advanced mobile emergency care services, and limited advanced mobile emergencycare services; research facilities; facilities for the care of dependent children; maintenance, storage, and utilityfacilities; parking lots and structures; garages; office facilities not less than 80% of the net leasable space ofwhich is intended for lease to or other use by direct providers of health care; facilities for the temporarylodging of outpatients or families of patients; residential facilities for use by the aged or disabled; and allnecessary, useful, or related equipment, furnishings, and appurtenances and all lands necessary or convenientas sites for the health care facilities described in this subdivision.

(j) "Health services" means 1 or more of the following:(i) Diagnosis and medical and surgical treatment by direct providers of health care of persons suffering

from illness, injury, and disability, including persons suffering from tuberculosis and other contagious andinfectious diseases, and persons requiring maternity care, rehabilitation, psychiatric care, or substance abuseservices; dentistry and related services; podiatric medicine and surgery; optometric services; psychologicalservices; skilled, basic, and visiting nursing services and home health services; ambulance operations;advanced mobile emergency care services and limited advanced emergency services; physical, respiratory,and occupational therapy; health maintenance services; services for the prevention of illness, injury, anddisability and for the promotion, maintenance, and improvement of public health and welfare; food servicesand care for dependent children, the disabled, and the elderly; and social work and chaplaincy servicesprovided in conjunction with other health services described in this subparagraph.

(ii) Conduct of or participation in programs for the education and training of health services personnel,including undergraduate, internship, residency, postgraduate, and continuing education programs forphysicians; schools and other training programs for nurses, technicians, therapists, pharmacists, and otherhealth services personnel; and in-service education of employees of health care facilities.

(iii) Research relating to the cause, prevention, and treatment of illness, injury, and disability, and theprotection, promotion, or improvement of public health and welfare.

(k) "Local governmental unit" means a county, city, or village.(l) "Nonprofit health care organization" means a public body organized and existing under the laws of this

state and authorized to provide health services, a nonprofit corporation incorporated under the nonprofitcorporation act, 1982 PA 162, MCL 450.2101 to 450.3192, or a not-for-profit corporation incorporated underthe laws of another state and qualified to do business in this state, that is organized and operated exclusivelyfor charitable, scientific, educational, or religious purposes and authorized to provide health services, no partof the net earnings of which inures to the benefit of any private shareholder or individual.

(m) "Project costs" means the total of the reasonable or necessary costs incurred for carrying out theacquisition, construction, repair, remodeling, equipping, or re-equipping of health care facilities. The termincludes, but is not limited to, any of the following costs: studies, surveys, plans, and specifications;architectural and engineering services; fees, charges, and expenses incurred in obtaining permits, approvals,and licenses for the acquisition, and initial operation of the health care construction, financing, facilities;legal, organizational, marketing, and other special services; acquisition, demolition, construction, equipment,and site development of new and rehabilitated buildings; rehabilitation, construction, repair, or remodeling ofexisting buildings; interest and carrying charges during construction and before full earnings are achieved butfor a period not to exceed 3 years after the date of the corporation obligations; operating expenses before fullRendered Thursday, July 1, 2021 Page 2 Michigan Compiled Laws Complete Through PA 35 of 2021


earnings are achieved, but for a period not to exceed 1 year following completion of construction; andreasonable reserves for payment of principal and interest on corporation obligations, not exceeding 15% ofthe principal amount of the corporation obligations. Project costs shall also include reimbursement of acorporation or a subsidiary corporation for any of the project costs described in this section expended beforethe issuance and delivery of the corporation obligations.

(n) "Restructured corporation" means a corporation that has completed the process described in section305a.

(o) "Restructured subsidiary corporation" means a subsidiary corporation that has completed the processdescribed in section 305a.

(p) "Subsidiary board" means the board of trustees of a subsidiary corporation.(q) "Subsidiary corporation" means a subsidiary municipal health facilities corporation incorporated under

this act. The term includes a restructured subsidiary corporation.(r) "Trustee" means a person serving on a board of trustees or a subsidiary board.(s) "Village" means a village establishing a corporation incorporated under, or governed by, this act.(t) "Village public hospital" means a health care facility that is owned or operated by a village.History: 1987, Act 230, Eff. Feb. 27, 1988;Am. 1988, Act 502, Eff. Jan. 1, 1989;Am. 2010, Act 331, Imd. Eff. Dec. 21, 2010.

CHAPTER 2

331.1201 Question of establishing corporation; election required.Sec. 201. Any county board of commissioners of a county not having a county public hospital on the

effective date of this act may incorporate 1 or more corporations under this act. Except as provided in sections203 and 204, and except in counties having a population of 100,000 or more as determined by the most recentpublished federal decennial census, the question of establishing a corporation shall be presented to the countyelectors at a special or regular county election prior to incorporation. The election proceedings under thissection shall be conducted in accordance with the Michigan election law, Act No. 116 of the Public Acts of1954, being sections 168.1 to 168.992 of the Michigan Compiled Laws.

History: 1987, Act 230, Eff. Feb. 27, 1988.

331.1202 Holding election; canvass; ballots.Sec. 202. An election required under section 201 shall be held at the usual places in the county for the

election of county officers, the vote to be canvassed in the same manner as that for county officers. Theballots to be used at any election at which the question is submitted shall be printed with a statement asfollows:

“Shall the county of _______ establish a county health facilities corporation in accordance with the termsof the county health facilities corporations act?

Yes ___ No ___”.History: 1987, Act 230, Eff. Feb. 27, 1988.

331.1203 Corporation as successor to county public hospital.Sec. 203. (1) Upon the expiration of 90 days after the effective date of this act, a county public hospital

organized and existing under Act No. 350 of the Public Acts of 1913, being sections 331.151 to 331.169 ofthe Michigan Compiled Laws, or Act No. 109 of the Public Acts of 1945, being sections 331.201 to 331.213of the Michigan Compiled Laws, on the effective date of this act shall be considered to be a corporationincorporated and existing under this act without the adoption or filing of articles of incorporation, without avote of county electors, and without diminishing the terms of office of persons serving as trustees on theeffective date of this act. A county public hospital shall not be considered to be a corporation incorporated andexisting under this act upon the expiration of the 90-day period if, within the 90-day period, the county boardof commissioners of the county in which the county public hospital is located passes a resolution prohibitingincorporation of the county public hospital under this act. Any such resolution shall be effective for not longerthan 12 months after the date of passage. Before the expiration of the 12-month period, and annuallythereafter, the county board of commissioners may pass a succeeding resolution prohibiting the incorporationof the county public hospital under this act. If the county board of commissioners fails to pass a succeedingresolution before the expiration of a 12-month period, the county public hospital automatically shall beincorporated under this act. The county board of commissioners of the county may at any time after theeffective date of this act adopt articles of incorporation for the corporation in accordance with section 206.Until such time as any such articles of incorporation are effective, the provisions of this act shall beconsidered to constitute the articles of incorporation of the corporation. Unless and until articles of



incorporation providing different numbers of trustees or terms of office are effective, corporations governedby Act No. 350 of the Public Acts of 1913 on the effective date of this act shall have a board of 9 trusteesserving 6-year terms, and corporations governed by Act No. 109 of the Public Acts of 1945 on the effectivedate of this act shall have a board of 5 trustees serving 3-year terms.

(2) Unless a resolution prohibiting incorporation of the county public hospital under this act has beenpassed and is in effect as provided in subsection (1), any county public hospital which has continuouslyoperated for not less than the 15 years immediately preceding the effective date of this act and which hasfunctioned or purported to function under Act No. 350 of the Public Acts of 1913, but which is unable todocument compliance with sections 1, 2, and 3 of Act No. 350 of the Public Acts of 1913, being sections331.151, 331.152, and 331.153 of the Michigan Compiled Laws, or any county public hospital which hascontinuously operated for not less than the 15 years immediately preceding the effective date of this act andwhich has functioned or purported to function under Act No. 109 of the Public Acts of 1945, but which isunable to document compliance with section 2 of Act No. 109 of the Public Acts of 1945, being section331.202 of the Michigan Compiled Laws, shall be considered to be a corporation described in subsection (1).All actions taken by its board of hospital trustees in good faith prior to the effective date of this act shall bevalidated, ratified, and confirmed, provided the county public hospital files a notice of its intention to utilizethis subsection with the county board of commissioners and the county clerk within 90 days after the effectivedate of this act. If necessary, the board of trustees shall be reconstituted in accordance with section 209(2), butwithout diminishing the terms of office of persons serving as trustees on the effective date of this act.

(3) Upon the expiration of 90 days after the effective date of this act, unless a resolution prohibitingincorporation of the county public hospital under this act has been passed and is in effect as provided insubsection (1), each corporation described in subsection (1) or (2) shall be considered to be the successor tothe county public hospital for the county, and the terms of office of trustees shall continue. The corporationshall have all of the rights, privileges, immunities, and franchises of its predecessor county public hospital, allpersonal property, all debts due on whatever account, and all choses in action. All interests and licenses of orbelonging to the county public hospital shall be considered to be transferred to and vested in the corporationwithout further act or deed. Such interests and licenses shall not be considered to have undergone any changeof ownership for the purpose of any law or regulation, nor shall the fiscal year of any county public hospitalbe considered to have ended solely because this act takes effect. The title to any real estate, or any interest inreal estate, vested in any county or county public hospital, shall not revert or in any way be impaired becausea corporation succeeds a county public hospital pursuant to this act.

(4) Upon the expiration of 90 days after the effective date of this act, unless a resolution prohibitingincorporation of the county public hospital under this act has been passed and is in effect as provided insubsection (1), each corporation described in subsection (1) or (2) shall be considered to be the owner of allmoney and other property then deposited in the treasury of the county to the credit of the hospital fund andshall be entitled to all interest and other earnings accruing on those funds on and after the effective date of thisact. The corporation shall be the owner of all other personal property used exclusively by or for the countypublic hospital. The treasurer of any county having custody of money and other property belonging to acorporation pursuant to this subsection shall arrange for the prompt transfer of such money and other propertyto the custody of the corporation.

(5) Upon the expiration of 90 days after the effective date of this act, unless a resolution prohibitingincorporation of the county public hospital under this act has been passed and is in effect as provided insubsection (1), each corporation described in subsection (1) or (2) shall be the employer of all personsemployed by the county public hospital and shall assume and be bound by any labor agreement in existenceon the effective date of this act and applicable to the county public hospital, but shall not be subject to greaterobligations with respect to the terms, conditions, or duration of employment than was the county publichospital immediately preceding the effective date of this act. A representative of the employees or a group ofemployees who is entitled to represent the employees or group of employees under Act No. 336 of the PublicActs of 1947, being sections 423.201 to 423.216 of the Michigan Compiled Laws, shall continue to be therepresentative of the employees or group of employees. This subsection does not limit the rights of thehospital employees, under applicable law, to assert that a bargaining representative protected by thissubsection is no longer the representative of the employees.

(6) Upon the expiration of 90 days after the effective date of this act, unless a resolution prohibitingincorporation of the county public hospital under this act has been passed and is in effect as provided insubsection (1), each corporation described in subsection (1) or (2) shall be responsible and liable for allliabilities and obligations of the county public hospital it succeeds. A claim existing or an action orproceeding pending by or against a county public hospital may be prosecuted by the corporation succeeding itin the name of the county public hospital, or the corporation may be substituted. The rights of creditors andRendered Thursday, July 1, 2021 Page 4 Michigan Compiled Laws Complete Through PA 35 of 2021


any lien upon the property of a county or a county public hospital existing on the effective date of the act shallnot be impaired.


331.1204 Organization of health care facilities.Sec. 204. Any county owning and operating a county hospital pursuant to charter or any statute other than

Act No. 350 of the Public Acts of 1913, or Act No. 109 of the Public Acts of 1945, may organize any or all ofthe health care facilities, other than county medical care facilities, as a corporation under this act by theadoption and filing of articles of incorporation in accordance with section 206 without a vote of the countyelectors.


331.1205 Corporation or subsidiary corporation; incorporation; name.Sec. 205. If, in accordance with sections 201 and 202, a majority of all the votes cast upon the question are

in favor of establishing a corporation, or if no vote of the electors is required for the establishment of acorporation pursuant to section 201 or 204, the county board of commissioners may incorporate a corporationin order to implement or further the public purposes stated in section 102 through the exercise of all or someof the powers provided in this act. The board of trustees of a corporation may incorporate 1 or moresubsidiary corporations in order to implement or further the public purposes stated in section 102 through theexercise of all or some of the powers provided in this act. The county board of commissioners shall adopt asuitable name for any corporation which it incorporates. The board of trustees of a corporation shall adopt asuitable name for any subsidiary corporation which it incorporates.


331.1206 Articles of incorporation; approval; contents.Sec. 206. Except as provided in section 203, the incorporation of a corporation by a county shall be

accomplished by approval of articles of incorporation by resolution of the county board of commissioners.The incorporation of a subsidiary corporation by a county shall be accomplished by approval of articles ofincorporation by resolution of the county board of commissioners. The articles of incorporation of acorporation or subsidiary corporation established by a county shall set forth the name of the corporation orsubsidiary corporation; the purposes for which it is created, which may include all of the purposes for which acorporation or subsidiary corporation may be organized under this act; the number, terms, and manner ofselection of the officers of its board of trustees or subsidiary board, which shall include a chairperson and asecretary, and a general description of their respective powers and duties; the date upon which theincorporation becomes effective; and the name of the newspaper in which the articles of incorporation shallbe published. The articles of incorporation of a subsidiary corporation shall also contain the name of thecorporation acting as its parent, and shall specify the size of the subsidiary board in accordance with section209(1). The articles of incorporation of a corporation established by a county may specify transactionsotherwise within the powers of its board of trustees which shall require approval by resolution of the countyboard of commissioners, and may also contain other matters considered expedient to be included in thearticles of incorporation. The articles of incorporation of a subsidiary corporation incorporated by a countymay specify transactions otherwise within the powers of its subsidiary board which shall require approval byresolution of the board of trustees of its designated parent corporation, and may also contain other mattersconsidered expedient to be included in the articles of incorporation.

History: 1987, Act 230, Eff. Feb. 27, 1988;Am. 1994, Act 398, Imd. Eff. Dec. 29, 1994.

331.1207 Articles of incorporation; execution; delivery; filing; publication; certificate;effective date of incorporation; validity of incorporation conclusively presumed; sectioninapplicable to articles of incorporation of restructured corporation or subsidiary.Sec. 207. (1) The articles of incorporation of a corporation incorporated by a county shall be executed in

duplicate by the chairperson of the county board of commissioners or other commissioner designated by thecounty board of commissioners. The articles of incorporation of a subsidiary corporation of a corporationincorporated by a county shall be executed in duplicate by the chairperson of the board of trustees of theparent corporation, or other trustee designated by the board of trustees. The articles of incorporation shall thenbe delivered to the county clerk who shall file 1 copy in his or her office and the other with the secretary ofthe corporation or subsidiary corporation when a secretary is selected. The county clerk shall cause a copy ofthe articles of incorporation to be published once in a newspaper designated in the articles of incorporationand circulating within the county accompanied by a statement that the right exists to question the validity of



the incorporation in court as provided in this section.(2) The county clerk shall file 1 printed copy of articles of incorporation delivered to him or her under

subsection (1) with the secretary of state and 1 printed copy in his or her office. The county clerk shall attachto each of the printed copies his or her certificate setting forth that the copy is a true and complete copy of theoriginal articles of incorporation on file in his or her office.

(3) The incorporation of a corporation or a subsidiary corporation described in this section is effective atthe time provided in the articles of incorporation.

(4) The validity of the incorporation of a corporation or a subsidiary corporation described in this section isconclusively presumed unless questioned in a court of competent jurisdiction within 60 days after the certifiedcopy of the articles of incorporation of that corporation or subsidiary corporation is filed with the secretary ofstate under subsection (2).

(5) This section does not apply to articles of incorporation of a restructured corporation or restructuredsubsidiary corporation described in section 305a.


331.1208 Articles of incorporation; amendment.Sec. 208. (1) The articles of incorporation of a corporation incorporated by a county may be amended by

resolution approved by the affirmative vote of a majority of the members serving on the county board ofcommissioners. The articles of incorporation of a subsidiary corporation of a corporation incorporated by acounty may be amended by resolution approved by the affirmative vote of a majority of the trustees servingon the board of trustees of the parent corporation.

(2) The county clerk shall file certified copies of any amendment to the articles of incorporation of acorporation or subsidiary corporation approved under subsection (1) in his or her office, with the secretary ofstate, and with the secretary of the corporation or subsidiary corporation. The amendment is effective whenfiled with the secretary of state unless a later effective date is specified in the resolution adopting theamendment. This subsection does not apply to an amendment to the articles of incorporation of a restructuredcorporation or a restructured subsidiary corporation.

(3) The articles of incorporation of a corporation or subsidiary corporation described in this section may beamended to include any provision that could be lawfully included in articles of incorporation initially adoptedunder this act at the time the amendment is approved, and may provide for the alteration or changing of thename, structure, organization, purposes, powers, programs, or activities of the corporation or subsidiarycorporation. However, an amendment shall not be effective to impair the obligation of a corporationobligation, bond, note, or contract.


331.1209 Board of trustees and subsidiary board incorporated by county; appointment andterms of trustees; qualifications; oath; removal from office; notice of hearing; hearing;vote.Sec. 209. (1) All of the following apply to each board of trustees of a corporation and subsidiary board of a

subsidiary corporation incorporated by a county:(a) The board shall consist of at least 5 and not more than 15 trustees. The exact number of trustees and the

length of their terms of office shall be as specified in the articles of incorporation or as provided under section203(1).

(b) Except for the initial appointments to a board of trustees or subsidiary board of a newly incorporatedcorporation or subsidiary corporation, the term of office of a trustee begins on January 1.

(c) The term of office of a trustee appointed to fill a vacancy on a board of trustees or subsidiary boardbegins when he or she is appointed and continues for the remainder of the term of the former trustee whoseposition became vacant.

(d) Terms of office of trustees shall be staggered so that an approximately equal number of terms expire atthe end of each year or each 2 years, except that terms may be fixed so that the shortest terms do not expireuntil the end of the second year following the incorporation of a corporation or a subsidiary corporation.

(e) A trustee whose term of office has expired shall continue to serve until his or her successor isappointed.

(f) The chief executive of a corporation established by a county and governed by 1913 PA 350, MCL331.151 to 331.169, shall serve as a member of the board of trustees until and unless the duly adopted articlesof incorporation provide otherwise. The chief executive officer of any other corporation or subsidiarycorporation established by a county is eligible to serve on the board of trustees or a subsidiary board, either byappointment or, if provided in the articles of incorporation, ex officio.Rendered Thursday, July 1, 2021 Page 6 Michigan Compiled Laws Complete Through PA 35 of 2021


(2) If a county incorporates a corporation under this act, the county board of commissioners shall appointthe initial board of trustees. After the initial board of trustees, when a trustee's term of office expires or if atrustee's office is otherwise vacant, the remaining members of the board of trustees shall fill the vacancy withthe advice and consent of the county board of commissioners. This subsection does not apply to an ex officiomember of a board of trustees who is appointed by a chief executive officer.

(3) Adoption of articles of incorporation for a corporation succeeding a county public hospital organizedand existing under 1913 PA 350, MCL 331.151 to 331.169, or 1945 PA 109, MCL 331.201 to 331.213, onFebruary 27, 1988 does not constitute incorporation of a corporation for purposes of subsection (2). The termsof office of trustees serving on the board of that county public hospital shall not be diminished, except that theadopted articles may prospectively establish new lengths of terms of office for the board of trustees, and mayprospectively alter the board size.

(4) If a county incorporates a subsidiary corporation, the board of trustees of the parent corporation shallappoint the initial subsidiary board with the advice and consent of the county board of commissioners. Afterthe initial subsidiary board, when a trustee's term of office expires or if a trustee's office is otherwise vacant,the board of trustees of the parent corporation shall fill the vacancy with the advice and consent of the countyboard of commissioners. This subsection does not apply to an ex officio member of a subsidiary board who isappointed by a chief executive officer.

(5) A trustee of a corporation or subsidiary corporation established by a county shall be chosen based onhis or her qualifications for that office, but not more than 1/3 of the trustees serving at any time shall be directproviders of health care. A trustee shall be a resident of the county unless the articles of incorporation permitindividuals who are not residents of the county to be a trustee. A trustee of the parent corporation, the chiefexecutive officer of the parent corporation, and the chief executive officer of a subsidiary corporation areeligible for appointment to a subsidiary board and a trustee or chief executive officer of a parent corporationare eligible for appointment as chief executive officer of a subsidiary corporation, and those offices are notincompatible. A trustee is eligible for reappointment.

(6) Within 9 days after commencing his or her term of office, a trustee shall take the oath of office asprovided in section 1 of article XI of the state constitution of 1963.

(7) A trustee of a corporation incorporated by a county may be removed from office for cause either byvote of a majority of the members then serving on the county board of commissioners or by vote of a majorityof the members then serving on the board of trustees of the corporation. A trustee of a subsidiary corporationincorporated by a county may be removed from office for cause either by vote of a majority of the membersthen serving on the county board of commissioners or by vote of a majority of the members then serving onthe board of trustees of the parent corporation. As used in this subsection, "cause" includes, but is not limitedto, incompetency to properly exercise duties; official misconduct; or habitual or willful neglect of duty,including, but not limited to, failure to attend meetings, including committee meetings, in accordance withstandards determined by the board of trustees of the corporation or subsidiary board.

(8) A trustee shall not be removed from office on grounds of misconduct or neglect unless the trustee isserved with a notice of hearing and a copy of the asserted ground for removal, and is given full opportunity tobe heard, either in person or by counsel, before a vote is taken on the question of removal from office.

History: 1987, Act 230, Eff. Feb. 27, 1988;Am. 1994, Act 398, Imd. Eff. Dec. 29, 1994;Am. 2011, Act 195, Imd. Eff. Oct. 18,2011.

331.1210 Board of trustees and subsidiary board; quorum; action by vote of majority.Sec. 210. A majority of the trustees serving on a board or subsidiary board shall constitute a quorum for

the transaction of business of the corporation or subsidiary corporation, respectively. Except as otherwisespecifically provided in this act, actions taken by a board of trustees or subsidiary board shall be by a vote of amajority of the members serving on the board or subsidiary board.


331.1211 Availability of writings to public; confidentiality.Sec. 211. A writing prepared, owned, used, in the possession of, or retained by a board of trustees or

subsidiary board in the performance of an official function shall be made available to the public in compliancewith the freedom of information act, Act No. 442 of the Public Acts of 1976, being sections 15.231 to 15.246of the Michigan Compiled Laws. This section does not abrogate any confidentiality provisions established bystate or federal law, including, but not limited to, those pertaining to the provision or review of healthservices.




331.1212 Compensation of trustees; bond; trustees as public servants; conflicts of interest;disclosure.Sec. 212. (1) Each trustee of a corporation or subsidiary corporation may receive compensation as shall be

established by the county board of commissioners for his or her services as a trustee, including, but notlimited to, attendance at meetings of the board of trustees or subsidiary board, or their committees, and perdiem and travel expenses, at rates approved by the county board of commissioners. A trustee may receivereimbursement for other necessary expenses which are properly substantiated and approved by the board oftrustees or subsidiary board. A corporation or subsidiary corporation may provide travel and accidentinsurance for its trustees.

(2) A bond shall not be required for trustees or officers of corporations or subsidiary corporations.(3) Trustees shall be considered public servants subject to Act No. 317 of the Public Acts of 1968, being

sections 15.321 to 15.330 of the Michigan Compiled Laws, to the extent provided in that act, and subject toany other applicable law with respect to conflict of interest. A board of trustees may establish policies andprocedures for a corporation and any subsidiary corporations requiring periodic disclosure of relationshipswhich may give rise to conflicts of interest. A board of trustees may require that a trustee who has a directinterest in any matter before a corporation or a subsidiary corporation disclose the trustee's interest and anyreasons reasonably known to the trustee why the transaction may not be in the best interest of the corporationor the subsidiary corporation before the corporation or subsidiary corporation takes any action with respect tothe matter. The disclosure shall become part of the record of the corporation's or subsidiary corporation'sproceedings.


331.1213 Corporation and subsidiary corporation as body corporate; power to sue and besued; official seal; liability or debt.Sec. 213. Each corporation and subsidiary corporation organized or existing under this act shall be a body

corporate with power to sue and be sued and to adopt an official seal and alter it at its discretion. A debt,claim, liability, corporation obligation, note, bond, or other obligation incurred by a corporation or asubsidiary corporation after the effective date of this act shall not be a liability or debt of or enforceableagainst the county, except as specifically otherwise provided by written agreement of the county approved byits board of commissioners. A debt, claim, liability, corporation obligation, note, bond, or other obligationincurred by a subsidiary corporation shall not be a liability or debt of or enforceable against its parentcorporation or another subsidiary corporation nor shall any debt, claim, liability, corporation obligation, note,bond, or other obligation incurred by a corporation be a liability or debt of or enforceable against itssubsidiaries, except as specifically otherwise provided in writing duly authorized by the corporation orsubsidiary corporation charged.


331.1251 Public hospital or other health care facility; incorporation of corporation; electionrequired.Sec. 251. The city council of a city or the village council of a village that owns or operates a public

hospital may incorporate 1 or more corporations under this act. The city council of a city or the villagecouncil of a village that does not own or operate a public hospital may also establish such a hospital or otherhealth care facility, or both, by incorporating 1 or more corporations under this act. The question ofestablishing 1 or more corporations under this act shall be presented to the city or village electors at a specialor regular city or village election before incorporation. An election under this section shall be conductedpursuant to the Michigan election law, Act No. 116 of the Public Acts of 1954, being sections 168.1 to168.992 of the Michigan Compiled Laws.

History: Add. 1988, Act 502, Eff. Jan. 1, 1989.

331.1252 Election; place; canvassing vote; ballots.Sec. 252. An election required under section 251 shall be held at the usual places in the city or village for

the election of city or village officers, the vote to be canvassed in the same manner as that for city or villageofficers. The ballots to be used at any election at which the question is submitted shall be printed with astatement as follows:

“Shall the city (or village) of __________ establish a health facilities corporation in accordance with theterms of the municipal health facilities corporations act?

Yes ___ No ___”.History: Add. 1988, Act 502, Eff. Jan. 1, 1989.



331.1253 Corporation as successor to city or village public hospital; terms of trusteescontinued; rights, privileges, immunities, and franchises, personal property, debts, andchoses in action; interests and licenses; title or interest in real estate; transfer of moneyand other property; corporation as employer; labor agreement; bargaining representative;liabilities and obligations; claims; pending action or proceeding; rights of creditors; liens.Sec. 253. (1) If the city or village electors approve the incorporation of a corporation under this act, the

corporation shall be considered to be the successor to the city public hospital for the city or the village publichospital for the village, and the terms of office of the trustees of the city public hospital or village publichospital shall continue. The corporation shall have all of the rights, privileges, immunities, and franchises ofits predecessor city public hospital or village public hospital, all personal property, all debts due on whateveraccount, and all choses in action. All interests and licenses of or belonging to the city public hospital orvillage public hospital shall be considered to be transferred to, and vested in, the corporation without furtheract or deed. Such interests and licenses shall not be considered to have undergone any change of ownershipfor the purpose of any law or regulation, nor shall the fiscal year of any city public hospital or village publichospital be considered to have ended solely because the city or village incorporates a corporation under thisact. The title to any real estate, or any interest in real estate, vested in any city or city public hospital or villageor village public hospital, shall not revert or in any way be impaired because a corporation succeeds a citypublic hospital or village public hospital pursuant to this act.

(2) A corporation incorporated by a city or village under this act shall be considered to be the owner of allmoney and other property then deposited in the treasury of the city or village to the credit of the hospital fundand shall be entitled to all interest and other earnings accruing on those funds on and after the effective date ofthe incorporation. The corporation shall be the owner of all other personal property used exclusively by or forthe city public hospital or village public hospital. The treasurer of any city or village having custody of moneyand other property belonging to a corporation pursuant to this subsection shall arrange for the prompt transferof such money and other property to the custody of the corporation.

(3) A corporation incorporated by a city or village under this act shall be the employer of all personsemployed by the city public hospital or village public hospital and shall assume and be bound by any laboragreement in existence on the effective date of the incorporation and applicable to the city public hospital orvillage public hospital, but shall not be subject to greater obligations with respect to the terms, conditions, orduration of employment than was the city public hospital or village public hospital immediately preceding theeffective date of the incorporation. A representative of the employees or a group of employees who is entitledto represent the employees or group of employees under Act No. 336 of the Public Acts of 1947, beingsections 423.201 to 423.216 of the Michigan Compiled Laws, shall continue to be the representative of theemployees or group of employees. This subsection does not limit the rights of the hospital employees, underapplicable law, to assert that a bargaining representative protected by this subsection is no longer therepresentative of the employees.

(4) A corporation incorporated by a city or village under this act shall be responsible and liable for allliabilities and obligations of the city public hospital or village public hospital it succeeds. A claim existing oran action or proceeding pending by or against a city public hospital or village public hospital may beprosecuted by the corporation succeeding it in the name of the city public hospital or village public hospital,or the corporation may be substituted. The rights of creditors and any lien upon the property of a city or a citypublic hospital or a village or village public hospital existing on the effective date of the incorporation shallnot be impaired.


331.1254 Incorporation of corporation and subsidiary corporations; names.Sec. 254. If, in accordance with sections 251 and 252, a majority of all the votes cast upon the question are

in favor of establishing a corporation, the city council or village council may incorporate a corporation inorder to implement or further the public purposes stated in section 102 through the exercise of all or some ofthe powers provided in this act. The board of trustees of a corporation may incorporate 1 or more subsidiarycorporations in order to implement or further the public purposes stated in section 102 through the exercise ofall or some of the powers provided in this act. The city council or village council shall adopt a suitable namefor any corporation which it incorporates. The board of trustees of a corporation shall adopt a suitable namefor any subsidiary corporation which it incorporates.


331.1255 Articles of incorporation generally.Rendered Thursday, July 1, 2021 Page 9 Michigan Compiled Laws Complete Through PA 35 of 2021


Sec. 255. The incorporation of a corporation by a city or village shall be accomplished by approval ofarticles of incorporation by resolution of the city council or village council. The incorporation of a subsidiarycorporation shall be accomplished by approval of articles of incorporation by resolution of the city council orvillage council. The articles of incorporation shall set forth the name of the corporation or subsidiarycorporation; the purposes for which it is created, which may include all of the purposes for which acorporation or subsidiary corporation may be organized under this act; the number, terms, and manner ofselection of the officers of its board of trustees or subsidiary board, which shall include a chairperson and asecretary, and a general description of their respective powers and duties; the date upon which theincorporation shall become effective; and the name of the newspaper in which the articles of incorporationshall be published. The articles of incorporation of a subsidiary corporation shall also contain the name of thecorporation acting as its parent, and shall specify the size of the subsidiary board in accordance with section258(2). The articles of incorporation of a corporation may specify transactions otherwise within the powers ofits board of trustees which shall require approval by resolution of the city council or village council, and mayalso contain other matters considered expedient to be included in the articles of incorporation. The articles ofincorporation of a subsidiary corporation may specify transactions otherwise within the powers of itssubsidiary board which shall require approval by resolution of the board of trustees of its designated parentcorporation, and may also contain other matters considered expedient to be included in the articles ofincorporation.


331.1256 Articles of incorporation; execution; delivery; publication; filing; certificate;effective date; validity of incorporation; section inapplicable to articles of incorporation ofrestructured corporation or subsidiary.Sec. 256. (1) The articles of incorporation of a corporation incorporated by a city or village shall be

executed in duplicate by the chairperson of the city council or the president of the village council or othermember of the city council or village council designated by the city council or village council. The articles ofincorporation of a subsidiary corporation of a corporation incorporated by a city or village shall be executedin duplicate by the chairperson of the board of trustees of the parent corporation, or other trustee designatedby the board of trustees. The articles of incorporation shall then be delivered to the city clerk or village clerkwho shall file 1 copy in his or her office and the other with the secretary of the corporation or subsidiarycorporation when a secretary is selected. The city clerk or village clerk shall cause a copy of the articles ofincorporation to be published once in a newspaper designated in the articles of incorporation and circulatingwithin the city or village accompanied by a statement that the right exists to question the validity of theincorporation in court as provided in this section.

(2) The city clerk or village clerk shall file 1 printed copy of articles of incorporation delivered to him orher under subsection (1) with the secretary of state and 1 printed copy in his or her office. The city clerk orvillage clerk shall attach to each of the printed copies his or her certificate setting forth that the copy is a trueand complete copy of the original articles of incorporation on file in his or her office.

(3) The incorporation of a corporation or a subsidiary corporation described in this section is effective atthe time provided in the articles of incorporation, but not before approval of the question of incorporation bythe city or village electors under section 251.

(4) The validity of the incorporation of a corporation or a subsidiary corporation described in this section isconclusively presumed unless questioned in a court of competent jurisdiction within 60 days after the certifiedcopy of the articles of incorporation of that corporation or subsidiary corporation is filed with the secretary ofstate under subsection (2).

(5) This section does not apply to articles of incorporation of a restructured corporation or restructuredsubsidiary corporation described in section 305a.

History: Add. 1988, Act 502, Eff. Jan. 1, 1989;Am. 2010, Act 331, Imd. Eff. Dec. 21, 2010.

331.1257 Articles of incorporation; amendment.Sec. 257. (1) The articles of incorporation of a corporation incorporated by a city or village may be

amended by resolution approved by the affirmative vote of a majority of the members serving on the citycouncil or village council. The articles of incorporation of a subsidiary corporation of a corporationincorporated by a city or village may be amended by resolution approved by the affirmative vote of a majorityof the trustees serving on the board of trustees of the parent corporation.

(2) The city clerk or village clerk shall file certified copies of any amendment to the articles ofincorporation of a corporation or subsidiary corporation approved under subsection (1) in his or her office,with the secretary of state, and with the secretary of the corporation or subsidiary corporation. TheRendered Thursday, July 1, 2021 Page 10 Michigan Compiled Laws Complete Through PA 35 of 2021


amendment is effective when filed with the secretary of state unless a later effective date is specified in theresolution adopting the amendment. This subsection does not apply to an amendment to the articles ofincorporation of a restructured corporation or a restructured subsidiary corporation.

(3) The articles of incorporation of a corporation or subsidiary corporation described in this section may beamended to include any provision that could be lawfully included in articles of incorporation initially adoptedunder this act at the time the amendment is approved, and may provide for the alteration or changing of thename, structure, organization, purposes, powers, programs, or activities of the corporation or subsidiarycorporation. However, an amendment shall not be effective to impair the obligation of a corporationobligation, bond, note, or contract.

History: Add. 1988, Act 502, Eff. Jan. 1, 1989;Am. 2010, Act 331, Imd. Eff. Dec. 21, 2010.

331.1258 Board of trustees and subsidiary board incorporated by city or village;appointment and terms of trustees; qualifications; oath; removal from office; notice ofhearing; hearing; vote.Sec. 258. (1) All of the following apply to each board of trustees and subsidiary board of a corporation

incorporated by a city or village:(a) The board shall consist of at least 5 and not more than 15 trustees. The exact number of trustees and the

length of their terms of office shall be as specified in the articles of incorporation.(b) Except for the initial appointments to a board of trustees or subsidiary board of a newly incorporated

corporation or subsidiary corporation, the term of office of a trustee begins on January 1.(c) The terms of office of trustees shall be staggered so that an approximately equal number of terms expire

at the end of each year or each 2 years, except that terms may be fixed so that the shortest terms do not expireuntil the end of the second year following the incorporation of a corporation or a subsidiary corporation. Atrustee whose term of office has expired shall continue to serve until his or her successor is appointed.

(2) If a city or village incorporates a corporation under this act, the city council or village council shallappoint the initial board of trustees. After the initial board of trustees, when a trustee's term of office expiresor if a trustee's office is otherwise vacant, the remaining members of the board of trustees shall fill thevacancy with the advice and consent of the city council or village council. This subsection does not apply toan ex officio member of a board of trustees who is appointed by a chief executive officer.

(3) The terms of office of trustees serving on the board of a city public hospital or village public hospitalbefore incorporation that is subsequently incorporated under this act shall not be diminished, except that thearticles of incorporation for that successor corporation may prospectively establish new lengths of terms ofoffice for the board of trustees, and may prospectively alter the board size.

(4) If a city or village incorporates a subsidiary corporation, the board of trustees of the parent corporationshall appoint the initial subsidiary board with the advice and consent of the city council or village council.After the initial subsidiary board, when a trustee's term of office expires or if a trustee's office is otherwisevacant, the board of trustees of the parent corporation shall fill the vacancy with the advice and consent of thecity council or village council. This subsection does not apply to an ex officio member of a subsidiary boardwho is appointed by a chief executive officer.

(5) A trustee of a corporation or subsidiary corporation established by a city or village shall be chosenbased on his or her qualifications for that office, but not more than 1/3 of the trustees serving at any time shallbe direct providers of health care. The articles of incorporation of the corporation or subsidiary corporationmay require that a trustee be a resident of the city or village. A trustee of the parent corporation, including itschief executive officer, and the chief executive officer of a subsidiary corporation are eligible for appointmentto a subsidiary board, and those offices are not incompatible. A trustee is eligible for reappointment.

(6) Within 9 days after commencing his or her term of office, a trustee shall take the oath of office asprovided in section 1 of article XI of the state constitution of 1963.

(7) A trustee of a corporation incorporated by a city or village may be removed from office for cause eitherby vote of a majority of the members then serving on the city council or village council or by vote of amajority of the members then serving on the board of trustees of the corporation. A trustee of a subsidiarycorporation may be removed from office for cause either by vote of a majority of the members then servingon the city council or village council or by vote of a majority of the members then serving on the board oftrustees of the parent corporation. As used in this subsection, "cause" includes, but is not limited to,incompetency to properly exercise duties; official misconduct; or habitual or willful neglect of duty,including, but not limited to, failure to attend meetings, including committee meetings, in accordance withstandards determined by the board of trustees of the corporation or subsidiary board.

(8) A trustee shall not be removed from office on grounds of misconduct or neglect unless the trustee isserved with a notice of hearing and a copy of the asserted ground for removal, and is given full opportunity toRendered Thursday, July 1, 2021 Page 11 Michigan Compiled Laws Complete Through PA 35 of 2021


be heard, either in person or by counsel, before a vote is taken on the question of removal from office.History: Add. 1988, Act 502, Eff. Jan. 1, 1989;Am. 1990, Act 273, Imd. Eff. Dec. 3, 1990;Am. 2011, Act 195, Imd. Eff. Oct.

18, 2011.

331.1259 Board of trustees and subsidiary board; quorum; actions.Sec. 259. A majority of the trustees serving on a board or subsidiary board of a corporation incorporated by

a city or village shall constitute a quorum for the transaction of business of the corporation or subsidiarycorporation, respectively. Except as otherwise specifically provided in this act, actions taken by a board oftrustees or subsidiary board shall be by a vote of a majority of the members serving on the board or subsidiaryboard.


331.1260 Board of trustees and subsidiary board; availability of writings to public;confidentiality.Sec. 260. A writing prepared, owned, used, in the possession of, or retained by a board of trustees or

subsidiary board of a corporation incorporated by a city or village in the performance of an official functionshall be made available to the public in compliance with the freedom of information act, Act No. 442 of thePublic Acts of 1976, being sections 15.231 to 15.246 of the Michigan Compiled Laws. This section does notabrogate any confidentiality provisions established by state or federal law, including, but not limited to, thosepertaining to the provision or review of health services.


331.1261 Board of trustees and subsidiary board; compensation and expenses; bond;trustees as public servants; policies and procedures; conflicts of interest; disclosure.Sec. 261. (1) Each trustee of a corporation or subsidiary corporation incorporated by a city or village may

receive compensation as established by the city council or village council for his or her services as a trustee,including, but not limited to, attendance at meetings of the board of trustees or subsidiary board, or theircommittees, and per diem and travel expenses, at rates approved by the city council or village council. Atrustee may receive reimbursement for other necessary expenses which are properly substantiated andapproved by the board of trustees or subsidiary board. A corporation or subsidiary corporation may providetravel and accident insurance for its trustees.

(2) A bond shall not be required for trustees or officers of corporations or subsidiary corporationsincorporated by a city or village.

(3) Trustees shall be considered public servants subject to Act No. 317 of the Public Acts of 1968, beingsections 15.321 to 15.330 of the Michigan Compiled Laws, to the extent provided in that act, and subject toany other applicable law with respect to conflict of interest. A board of trustees may establish policies andprocedures for a corporation and any subsidiary corporations requiring periodic disclosure of relationshipswhich may give rise to conflicts of interest. A board of trustees may require that a trustee who has a directinterest in any matter before a corporation or a subsidiary corporation disclose the trustee's interest and anyreasons reasonably known to the trustee why the transaction may not be in the best interest of the corporationor the subsidiary corporation before the corporation or subsidiary corporation takes any action with respect tothe matter. The disclosure shall become part of the record of the corporation's or subsidiary corporation'sproceedings.


331.1262 Corporation and subsidiary corporation as body corporate; powers; liability ordebt.Sec. 262. Each corporation and subsidiary corporation incorporated by a city or village and organized

under this act shall be a body corporate with power to sue and be sued and to adopt an official seal and alterthe official seal at its discretion. A debt, claim, liability, corporation obligation, note, bond, or other obligationincurred by a corporation or a subsidiary corporation after the effective date of the incorporation shall not be aliability or debt of or enforceable against the city or village, except as specifically otherwise provided bywritten agreement of the city or village approved by the city council or village council. A debt, claim,liability, corporation obligation, note, bond, or other obligation incurred by a subsidiary corporation shall notbe a liability or debt of or enforceable against its parent corporation or another subsidiary corporation norshall any debt, claim, liability, corporation obligation, note, bond, or other obligation incurred by acorporation be a liability or debt of or enforceable against its subsidiaries, except as specifically otherwiseprovided in writing duly authorized by the corporation or subsidiary corporation charged.




CHAPTER 3

331.1301 Corporation and subsidiary corporation; powers generally.Sec. 301. Each corporation and subsidiary corporation governed by this act shall possess all of the powers

necessary to carry out the purposes of its incorporation and those incident thereto. Such powers shall bevested in and exercised by its board of trustees or subsidiary board. The enumeration of any powers in this actshall not be considered as a limitation upon the general powers of the corporation or subsidiary corporation.


331.1302 Bylaws.Sec. 302. Each corporation, and each subsidiary corporation with the approval of its parent corporation,

may adopt and amend 1 or more sets of bylaws consistent with the applicable provisions of this act, the openmeetings act, Act No. 267 of the Public Acts of 1976, being sections 15.261 to 15.275 of the MichiganCompiled Laws, its articles of incorporation, and other applicable law providing for conduct of its affairs andoperation of its activities and health care facilities, which may include, but shall not be limited to, provisionswith respect to the following:

(a) The frequency, call, and conduct of meetings of the board of trustees or subsidiary board.(b) The powers and responsibilities of officers, including the chief executive officer.(c) The size, manner of appointment, and term of committees, which, except as otherwise provided in the

bylaws, may include persons who are not trustees, and the purposes and powers of such committees.Responsibility may be assigned to committees for monitoring implementation of policies adopted by theboard of trustees or subsidiary board and for the formulation of budgets, plans, and policies and thedevelopment of other recommendations for adoption by the board of trustees or subsidiary board. Committeesshall not be empowered to exercise governmental or proprietary authority or to perform a governmental orproprietary function.

(d) Procedures for appointment, removal, and discipline of medical staff or other direct providers of healthcare and for delineation of their clinical privileges, together with provisions for the organization of such stafffor the purpose of reviewing and improving the health services provided, and for administrative and otherpurposes.

(e) The purposes, organization, and control of auxiliaries and other voluntary organizations supporting thework of the corporation or subsidiary corporation.


331.1303 Board of trustees and subsidiary board; powers generally.Sec. 303. Without limiting the powers described in section 301 and elsewhere in this act, each board of

trustees and subsidiary board, in furtherance of its purposes and consistent with the provisions of its articles ofincorporation, but subject to applicable licensing and other regulatory requirements, may do any or all of thefollowing:

(a) Establish, modify, discontinue, operate, and manage health services, either alone or in conjunction withother entities.

(b) Select physicians and such other direct providers of health care as it may determine for membership onits medical staff, delineate the clinical privileges of direct providers of health care within its health carefacilities, and provide for the termination, suspension, or restriction of medical staff membership and clinicalprivileges. In making appointments and reappointments to the medical staff and in granting or withdrawingclinical privileges, the board of trustees or subsidiary board shall consider training, experience, and otherprofessional qualifications, and may also consider health status, professional liability coverage, the characterand capacity of the health care facilities, the needs of the community served by the health care facility, andsuch other factors as such board of trustees or subsidiary board reasonably considers to be appropriate.

(c) Provide for the organization of physicians and such other direct providers of health care as it maydetermine into a medical staff and establish additional procedures for review of the professional practices inits health care facilities pursuant to the public health code, Act No. 368 of the Public Acts of 1978, beingsections 333.1101 to 333.25211 of the Michigan Compiled Laws, and other applicable law.

(d) Establish reasonable rules and regulations for the provision of health services in its health carefacilities, for the use of its health care facilities by patients, visitors, and others, and for management of itsbusiness and affairs.

(e) Employ a chief executive officer and such other employees as may be required to carry out itspurposes; establish policies with respect to the duties, qualifications, compensation, benefits, and other termsRendered Thursday, July 1, 2021 Page 13 Michigan Compiled Laws Complete Through PA 35 of 2021


of employment of its employees; provide for participation by its employees in retirement or pension plans ofthe local governmental unit, establish its own retirement or pension plans, or participate in other publicprograms for the provision of retirement or pension benefits; establish rules for a system of civil service; andenter into collective bargaining and other agreements with respect to these matters. Each corporation andsubsidiary corporation shall be considered to be a public employer separate from the local governmental unit.

(f) Establish reasonable fees and charges for the use of its health care facilities and for the health services itprovides, and provide policies for the care of those unable to pay fully for their care at reduced rates orwithout charge.

(g) Enter into contracts and participate in programs with federal and state government, insurers, health carecorporations, health maintenance organizations, prudent purchaser arrangements, alternative health caredelivery and financing systems, employers, individuals, and other public and private entities, for the provisionof health services and for the payment for health services furnished on any basis considered appropriate by theboard of trustees and subsidiary board, including, but not limited to, payment prospectively or retrospectivelydetermined based upon its full or discounted rates and charges or costs, or based upon fixed rates perindividual, group, visit, procedure, or other unit of service. As used in this subdivision, “health carecorporation” means a health care corporation incorporated under the nonprofit health care corporation reformact, Act No. 350 of the Public Acts of 1980, being sections 550.1101 to 550.1704 of the Michigan CompiledLaws.

(h) Make and execute contracts, leases, and all other agreements or instruments necessary or convenient tofulfill its purposes, including but not limited to, exclusive and nonexclusive contracts or leases with directproviders of health care for the provision of health services to patients or the operation of health care facilitiesor departments of health care facilities on its behalf and contracts, leases, agreements, and other instrumentsrelating to the joint conduct of health services and the operation of programs for sharing of goods, services, orfacilities with other direct providers of health care.

(i) Appoint 1 or more attorneys to serve as legal advisors and representatives.History: 1987, Act 230, Eff. Feb. 27, 1988;Am. 1988, Act 502, Eff. Jan. 1, 1989.

331.1304 Board of trustees and subsidiary board; additional powers.Sec. 304. Without limiting the powers described in section 301 and elsewhere in this act, each board of

trustees and subsidiary board, in furtherance of its purposes and consistent with its articles of incorporation,but subject to applicable licensing and other regulatory requirements, may do any or all of the following:

(a) Establish sites for its health care facilities inside or outside the local governmental unit and relocate itshealth care facilities in the same municipality or elsewhere.

(b) Acquire by purchase, gift, devise, lease, sublease, installment purchase agreement, land contract,option, or by any other means, hold, and own in its own name health care facilities and interests therein andother real and personal property, including, but not limited to, interests in condominiums, and property subjectto mortgages, security interests, or other liens, necessary or convenient to fulfill its purposes; and, for thepurpose of condemnation, proceed under the uniform condemnation procedures act, Act No. 87 of the PublicActs of 1980, being sections 213.51 to 213.77 of the Michigan Compiled Laws, or other applicable statute.

(c) Construct, add to, repair, remodel, renovate, equip, and re-equip health care facilities and establishrules, regulations, or policies conforming with applicable law with respect to requirements for competitivebidding, advertising, advertising for bids and letting contracts. However, in all cases, the right to reject anyand all bids shall be reserved.

(d) Dispose of its real and personal property by sale, lease, sublease, installment sale agreement, landcontract, or other lawful means.

(e) Purchase, contract for, or acquire administrative, management, and other services necessary orconvenient to the fulfillment of its purposes from the local governmental unit and from other sources and sellthese services to the local governmental unit and to other public and private persons.

(f) Apply for, negotiate, receive, and accept gifts or grants of money, property, services, or other aidoffered or made available to it, and comply, subject to the provisions of this act and other applicable law, withthe terms of such gifts, grants, or other aid.

(g) Provide insurance, reinsurance, obtain indemnification or establish programs or trusts for self-insuranceagainst loss in connection with its assets or any liability in connection with its activities. The insurance,reinsurance, indemnification, or self-insurance shall be in such forms and amounts, and from such sources, asit considers appropriate.

(h) Invest funds not immediately required for its purposes, funds accumulated to provide retirement orpension benefits, endowment funds created for charitable or educational purposes, and other funds in anymanner in which a local governmental unit may then lawfully invest such property and loan its funds inRendered Thursday, July 1, 2021 Page 14 Michigan Compiled Laws Complete Through PA 35 of 2021


furtherance of its purposes.(i) Borrow money from the local governmental unit in accordance with section 305(e) and enter into

agreements for the repayment of the loans.(j) Grant mortgages, security interests, and other liens in its real and personal property, sell and lease back

its real and personal property, and pledge its property or revenues in furtherance of its purposes.(k) Guarantee, in whole or in part, bonds, notes, and other obligations of the local governmental unit

undertaken for its benefit and grant mortgages, security interests, and other liens in its real and personalproperty and pledge its property or revenues to secure obligations of the local governmental unit undertakenfor its benefit, with or without guaranteeing such obligations.

(l) Transfer real or personal property to subsidiary corporations or parent corporations in furtherance of itspurposes or the purposes of the subsidiary or parent corporations, with or without monetary consideration, andtransfer money and other real and personal property not required to carry out its purposes to the localgovernmental unit.

(m) Guarantee, in whole or in part, corporation obligations, bonds, notes, and other obligations of asubsidiary corporation or a parent corporation.

(n) Grant mortgages, security interests, or other liens in its real and personal property and pledge itsproperty or revenues to secure corporation obligations, bonds, notes, or other obligations of 1 or more of itssubsidiary corporations or its parent corporation, with or without guaranteeing such obligations.


331.1305 Powers of local governmental unit generally.Sec. 305. Subject to applicable licensing and other regulatory requirements, a local governmental unit may

do any or all of the following:(a) Acquire health care facilities by purchase, gift, devise, lease, sublease, installment purchase agreement,

land contract, option, or other means; construct, add to, repair, remodel, renovate, equip, and reequip healthcare facilities for use, in whole or in part, by a corporation or a subsidiary corporation; borrow money andissue bonds in accordance with 1923 PA 118, MCL 141.61 to 141.66; enter into contracts of lease under 1948(1st Ex Sess) PA 31, MCL 123.951 to 123.965; or enter into obligations under other applicable laws toacquire health care facilities. However, whether or not otherwise permitted by law, a local governmental unitshall not borrow funds, lease property, or acquire property pursuant to a lease purchase agreement with a localhospital authority incorporated under the hospital finance authority act, 1969 PA 38, MCL 331.31 to 331.84,nor shall a local governmental unit otherwise receive the proceeds of bonds issued by a local hospitalauthority, except as consideration for property transferred by the local governmental unit to a third party. Anybonding proposal requiring approval of the electors of a local governmental unit may be presented at the sameelection described in sections 201 and 202 or sections 251 and 252.

(b) Transfer or make available health care facilities and other real and personal property to a corporation ora subsidiary corporation by sale, lease, sublease, installment sale agreement, contract, or other means onterms, with or without monetary consideration, approved by the county board of commissioners, city council,or village council. A health care facility owned and operated by a corporation or a subsidiary corporation isnot considered to be owned or operated by the local governmental unit.

(c) Grant mortgages, security interests, and other liens in, pledge or sell and lease back its interests inhealth care facilities and other real and personal property to secure bonds, notes, or other obligations of acorporation or subsidiary corporation, upon terms approved by the county board of commissioners, citycouncil, or village council. The amount of the bonds, notes, or other obligations must not be included incomputing the net bonded indebtedness of the local governmental unit for the purposes of debt limitationsimposed by any constitutional, statutory, or charter provision, unless the local governmental unit pledges fullfaith and credit to the payment of the bond, note, or other obligation.

(d) Guarantee any corporation obligation, bond, note, or other obligation of a corporation or a subsidiarycorporation on terms approved by the county board of commissioners, city council, or village council, andpledge specified revenues or assets of the local governmental unit or the full faith and credit of the localgovernmental unit to the payment of the guaranty. The resolution of the county board of commissioners, citycouncil, or village council approving any guaranty which pledges the full faith and credit of the localgovernmental unit must contain a proviso that the resolution must not become effective and binding upon thelocal governmental unit until it has been approved by a majority of the electors voting at a special or regularlocal governmental unit election. The election proceedings under this subdivision must be conducted inaccordance with the Michigan election law, 1954 PA 116, MCL 168.1 to 168.992. The amount of any bonds,notes, or other obligations secured by a guaranty that pledges the full faith and credit of the localgovernmental unit must be included in computing the net bonded indebtedness of the local governmental unitRendered Thursday, July 1, 2021 Page 15 Michigan Compiled Laws Complete Through PA 35 of 2021


for the purposes of debt limitations imposed by any constitutional, statutory, or charter provision.(e) Loan to a corporation or a subsidiary corporation money from the general fund of the local

governmental unit or from funds not raised by taxation available to the local governmental unit for theacquisition of or improvements to health care facilities, operation of health services or for any other purposeof the corporation or subsidiary corporation, and enter into agreements with the borrowing corporation orsubsidiary corporation for the repayment of those loans over a term not to exceed 30 years, with or withoutsecurity.

(f) Appropriate money and transfer the money to 1 or more corporations or subsidiary corporationsestablished by the local governmental unit for the acquisition of or improvements to health care facilities,operation of health services, or any other purpose of the corporations or subsidiary corporations. The totalsums appropriated for those purposes each year from the general fund of the local governmental unit must bein addition to any taxes and appropriations to satisfy local governmental unit indebtedness under bonds, notes,or guaranties described in subdivisions (a) and (d). Money may be appropriated from funds not raised bytaxation and available to the local governmental unit for those purposes without limitation.

(g) Notwithstanding subdivision (f), a county with a county public hospital organized and operated under1945 PA 109, MCL 331.201 to 331.213, on February 27, 1988 may assess taxes not to exceed in any 1 year 1mill on each dollar of assessed valuation of the county for the purpose of acquisition, construction, andoperation of any health care facilities without a vote of county electors, and may appropriate money from itsgeneral fund for the acquisition, construction, and operation of any health care facilities without limitation.

(h) Enter into agreements or arrangements for a corporation or a subsidiary corporation to provide healthservices to local governmental unit employees, dependents of local governmental unit employees, indigents,or others, providing for payment for health services in any of the ways described in section 303(g).

(i) Sell, contract, or make available to corporations or subsidiary corporations established by the localgovernmental unit, administrative, management, and other services necessary or convenient to fulfill thepurposes of the corporation or subsidiary corporation, and purchase the services from a corporation orsubsidiary corporation that may be required for any local governmental unit purpose.

History: 1987, Act 230, Eff. Feb. 27, 1988;Am. 1988, Act 497, Imd. Eff. Dec. 29, 1988;Am. 1988, Act 502, Eff. Jan. 1, 1989;Am. 2002, Act 484, Imd. Eff. June 27, 2002;Am. 2018, Act 312, Imd. Eff. June 29, 2018.

331.1305a Restructure of corporation or subsidiary corporation as nonprofit.Sec. 305a. (1) Subject to applicable licensing and other regulatory requirements, the requirements of the

nonprofit act, and the requirements of this section, the board of trustees or the subsidiary board mayrestructure a corporation or subsidiary corporation as a nonprofit corporation subject to the nonprofit act if allof the following are met:

(a) The corporation or subsidiary corporation is located in a county that had a population of more than45,000 and less than 60,000 as of the most recent decennial census.

(b) The restructuring is completed before June 30, 2018.(2) A board of trustees or subsidiary board proposing to restructure a corporation or subsidiary corporation

under this section must adopt a restructuring plan that includes all of the following:(a) The terms and conditions of the proposed restructuring.(b) The proposed articles of incorporation and bylaws that are to govern the restructured corporation or

restructured subsidiary corporation. The articles and bylaws must comply with the requirements of thenonprofit act.

(3) If a restructuring plan described in subsection (2) is approved under this section, the corporation orsubsidiary corporation shall file the articles of incorporation described in subsection (2)(b) with theadministrator, in the manner provided in the nonprofit act.

(4) The effective date of a restructuring under this section is the effective date of the articles ofincorporation under the nonprofit act. All of the following apply when a restructuring under this section takeseffect:

(a) The restructured corporation or restructured subsidiary corporation is considered a continuation of therestructuring corporation or subsidiary corporation.

(b) The restructured corporation or restructured subsidiary corporation has all of the liabilities of therestructuring corporation or subsidiary corporation and the restructuring does not affect any obligations orliabilities of the corporation or subsidiary corporation incurred before the restructuring or the personalliability of any person incurred before the restructuring.

(c) The title to all real estate and other property and rights owned by the corporation or subsidiarycorporation remain vested in the restructured corporation or restructured subsidiary corporation withoutreversion or impairment.Rendered Thursday, July 1, 2021 Page 16 Michigan Compiled Laws Complete Through PA 35 of 2021


(d) The rights, privileges, powers, and interests in property of the corporation or subsidiary corporation, aswell as the debts, liabilities, and duties of the corporation or subsidiary corporation, shall not be considered, asa consequence of the restructuring, to have been transferred to the restructured corporation or restructuredsubsidiary corporation for any purpose of the laws of this state.

(e) A proceeding pending against the corporation or subsidiary corporation may be continued as if therestructuring had not occurred, or the restructured corporation or restructured subsidiary corporation may besubstituted in the proceeding for the corporation or subsidiary corporation.

(f) The restructured corporation or restructured subsidiary corporation is considered to be the same entitythat existed before the restructuring and is considered to be incorporated on the date that the corporation orsubsidiary corporation was originally incorporated.

(g) The restructured corporation or restructured subsidiary corporation is subject to the nonprofit act and,except as otherwise provided in this act, is subject to the provisions of this act.

(h) The articles of incorporation of the corporation or the subsidiary corporation filed with the county clerkunder section 207 or the city clerk or village clerk under section 256 are considered terminated and thearticles of incorporation filed under the nonprofit act apply to the corporation or subsidiary corporation. Thecorporation or subsidiary corporation shall deliver a copy of the articles of incorporation of the restructuredcorporation or restructured subsidiary corporation to that county clerk, city clerk, or village clerk, and thecounty clerk, city clerk, or village clerk will indicate in his or her records that the corporation or subsidiarycorporation has restructured under this section and that the articles of incorporation previously filed with himor her under section 207 or 256 are no longer in effect.

(i) The corporation or subsidiary corporation shall deliver a copy of the articles of incorporation of therestructured corporation or restructured subsidiary corporation to the secretary of state and notify the secretaryof state that the articles of incorporation previously filed with him or her by the county clerk, city clerk, orvillage clerk under section 207 or 256 are no longer in effect.

(5) A subsidiary board may not restructure a subsidiary corporation as a nonprofit corporation under thissection without the prior approval of the board of trustees of its parent corporation to the restructuring.

(6) A board of t

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